What is Progressive commercial auto insurance

Progressive Commercial- The Insurance

Progressive Corp.'s rapid return to double-digit rates of commercial line premium growth raises a number of questions about the company's competitive position and the direction of the market as a whole.

Progressive poised to expand commercial auto leadership with rapid third quarter growth
progressive commercial

The company, which is already the number one commercial auto insurer in the US, could be taking additional involvement from competitors, some of whom have taken more precautions due to past profitability challenges. 

Or your book could be particularly well positioned to benefit from dramatic shifts in underlying consumer demand for many commercial auto policyholders. Perhaps it is a combination of the two.

new progressive commercial insurance

The latest release of the company's results shows a growth of almost 36% in net premiums for commercial lines issued in September, a month after the segment produced a huge expansion of 48.8%. 

For the third quarter, S&P Global Market Intelligence estimates that the company's net written premiums for the company's business lines increased more than 33.6%, the largest increase in the segment in a fiscal quarter since the three-month period ended March 31. March 2018. 

Annual exchange rates, calculated by S&P Global Market Intelligence using monthly earnings data, were an increase of just over 1% in the second quarter and a decrease of 1.8% in the first quarter.

Progressive's monthly premium volumes are subject to calendar-related noise. The most recent release included two days of fiscal October, for example, which could give an artificial boost to the September and third-quarter trends. 

Therefore, the results for the last 12 months can provide a more complete picture of trends in turnover.

On that basis, net written premiums for commercial lines increased 15.5% through September. Just two months earlier, the growth rate for the past 12 months had fallen to just 2.4%.

 Both comparisons saw Progressive's March recognition of a $ 110.5 million premium reduction in its transportation network company's business, reflecting a decrease in actual miles traveled during the month and a revised estimate of miles traveled during the rest of the terms of the policy. 

progressive commercial auto

Excluding that single item, Progressive's growth rates for the past 12 months in commercial lines would have been 17.9% in September and 4.7% in July.

During the first nine months of 2020, the premium growth rate was 11.2%, or 14.3% when normalized for the single transportation network enterprise element.

The results of Progressive's business lines include automobile-related physical damage and primary liability insurance, as well as general liability and property insurance, primarily for small businesses.

Statutory results from the company's P&C subsidiaries in the US suggest that commercial cars account for the majority of premium deeds. 

While the quarterly data does not distinguish between personal and commercial auto physical damage businesses, commercial cars accounted for 85.2% of Progressive's written business lines in 2019.

The company's direct business multiple liability and other risk premiums increased up 21.4% in the second quarter to $ 71.8 million compared to commercial auto liability premium volume for that period of $ 865.9 million.

Its legal-based commercial auto liability premiums increased just 0.1% in the second quarter, but that was well above the 6.6% decline recorded by the rest of the industry combined. Results among the top 10 commercial auto liability writers varied widely over the period, from a 39.5% drop at Berkshire Hathaway Inc. to a 17.5% rise at American International Group Inc.

Berkshire Hathaway companies extended COVID-19 premium credits to their biBERK Insurance services were small business customers, but those credits weren't as ubiquitous in the commercial auto industry as they were in personal auto. 

progressive commercial vehicle insurance

The commercial auto business has also been subject to general rate hikes, as many companies look to address poor underwriting results along those lines.

Macroeconomic trends during the pandemic have impacted business enterprises in very different ways, particularly in light of dramatic changes in consumer behavior and the implementation of government restrictions on certain activities.

Against that backdrop, Progressive saw "substantial growth" in the rental truck business in September due to increased demand for shipping services. The insurer also said that its transportation networks company business increased net written premiums by 29.5% to $ 114 million.

Growth rates in premium volume continued to outpace the expansion in the policy count. Progressive reported approximately 803,900 commercial lines policies effective in September, 7.4% more than the previous year. The pace of expansion has remained within a relatively narrow range of 5.5% to 8.7% month-on-month for almost the last three years.

Meanwhile, technical results have remained strong across Progressive's business lines. September's combined commercial lines ratio of 85.5% marked the seventh time in the past 10 months that the figure was below 90%. 

The company accomplished the same feat 20 times in the past 33 months during what has otherwise been a historically challenging time for commercial auto results across the industry.

During the first nine months of 2020, Progressive's combined business lines index fell to 87.3% from 88.7% in the same period last year.

That result suggests more room for expansion at a time when behavioral changes related to the pandemic seem unlikely to materially change in the short term.

Infrastructure issues: tools to drill down into potential risks

Infrastructure issues: understanding and mitigating risks

progressive commercial vehicle insurance

This is the third and final blog in a series on infrastructure projects. You can access the other two blogs here:

Infrastructure problems: at the crossroads of a potential $ 15 trillion problem

Infrastructure issues: understanding and mitigating risks

The demand for new infrastructure is great, and qualified global infrastructure shows strong credit quality and low risk. [1] However, how do potential market participants reliably assess the specific level of risk associated with a project? 

Broad risk assessment factors can be captured in a rating model or framework to support consistent analysis across multiple projects.

The S&P Global Market Intelligence Project Finance toolset provides a framework for analyzing Project Finance transactions, regardless of the industry or sector in which they operate. The suite comprises probability of default (PD) and loss-to-default (LGD) scorecards that bring together statistically validated PD and LGD methodologies, quantitative and qualitative risk factors, and market benchmarks to build an evaluation framework. Unique and robust to identify and manage Project Finance. Credit risks.

The Project Finance Professional Development Dashboard

The Project Finance PD Scorecard generates credit scores that are designed to broadly align with S&P Global Ratings credit ratings. This Excel-based tool has been used by a wide range of institutions for more than two decades to help identify and manage relevant project finance risks. Common uses include:

Management of financial and non-financial risks.

Pricing of loans, guarantees and insurance premiums.

Financial information under local or international standards (for example, CECL or IFRS9).

Structure projects to achieve an identified set of objectives (eg, emission reduction).

A combination of quantitative and qualitative questions is used in a checkbox style to identify key risks. This is transparent, so the underlying logic is provided to users (including weights).

The Project Finance LGD scorecard

The Project Finance LGD scorecard is designed to estimate the potential loss experienced by an exposed party, assuming the project is in default. 

The Scorecard produces point estimates of loss, capturing even the smallest changes in the value of inputs, which is crucial in the proof-of-concept stage of a project where sensitivity analysis is key.

With a better understanding of the potential risks associated with project financing, using tools such as S & P's Global Market Intelligence Scorecards, additional private capital can emerge to help meet the large unmet demand for infrastructure projects.

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